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Pharmaceutical
The Union Budget 2011-12 is expected to be a non-event for the pharma sector. The government could, however,
continue to increase budgetary allocation for healthcare spending, which would be an overall positive for the
sector.
Indian pharma companies have been investing on the R&D front to tap opportunities both in the domestic and
global markets. Although the government has increased the weighted deduction on R&D expenditure to 200%
(in-house research), the industry expects an extension on the tenure of deduction, which is currently available only
till FY2012. It is also expected to cover patent litigation costs under weighted deduction and widen the scope by
including research work carried ‘outside’ the R&D facility in India and outside India. Any extension of EOU
provisions would be positive for the sector, especially for companies that have not or have been slow in expanding
through SEZ. On the excise front, the industry expects duty on API to be in sync with that on formulations or a
better clarity in terms of the CENVAT credit refund mechanism. The abatement on pharma products, which is
currently 35% of the MRP, is also expected to increase, sufficient to cover the costs. There are apprehensions that
the FDI cap of 100% would be reduced to 49%, which if happens would be negative for the sector. Overall, we
expect the budget to be Neutral for the sector.
Top Picks
Alembic
Aurobindo
Cipla
Indoco Remedies
Lupin
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pharmaceutical
The Union Budget 2011-12 is expected to be a non-event for the pharma sector. The government could, however,
continue to increase budgetary allocation for healthcare spending, which would be an overall positive for the
sector.
Indian pharma companies have been investing on the R&D front to tap opportunities both in the domestic and
global markets. Although the government has increased the weighted deduction on R&D expenditure to 200%
(in-house research), the industry expects an extension on the tenure of deduction, which is currently available only
till FY2012. It is also expected to cover patent litigation costs under weighted deduction and widen the scope by
including research work carried ‘outside’ the R&D facility in India and outside India. Any extension of EOU
provisions would be positive for the sector, especially for companies that have not or have been slow in expanding
through SEZ. On the excise front, the industry expects duty on API to be in sync with that on formulations or a
better clarity in terms of the CENVAT credit refund mechanism. The abatement on pharma products, which is
currently 35% of the MRP, is also expected to increase, sufficient to cover the costs. There are apprehensions that
the FDI cap of 100% would be reduced to 49%, which if happens would be negative for the sector. Overall, we
expect the budget to be Neutral for the sector.
Top Picks
Alembic
Aurobindo
Cipla
Indoco Remedies
Lupin
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